Jun 012011

I passed this today, another closing Blockbuster in one of the busiest neighborhoods in Manhattan.

Closed Blockbuster at 8th Ave & 51st St., NYC

It’s hard to imagine Blockbuster surviving; they missed the Netflix mail-in revolution, and are barely hanging in there as a latecomer to the Redbox kiosk movement. But more than that, I think, is that they made their customers hate them, despise them to the point of filing multiple lawsuits. And when your customers loathe you, resent your practices enough to sue you, they leave when they can. And they slam the door on the way out.

From where the hatred? Well, late fees, mostly, daily rental compounded day after day, the bad news delivered in person by a surly, overworked, “I’m sorry but I can’t rent you anything until you clear this” clerk.

It reminded me of Saturday nights long ago, maybe as far back as 20 years ago. We’d be home, talking about what movie to get, balancing the shiny new releases, against what might already be sold out when we got to the store.

We’d drive to the store, find parking, make our way in, browse through all the new sold out releases, checking with the clerk to see if maybe one of them had just been returned (“Can you check the returns bin again, sir”?) and, from whatever was left, pick two or three films, wait on line for checkout, and finally get to the counter.

And as much of a hassle as all of that was, nothing was as bad as finding out that there was a late fee to clear up because we went over 24 hours last time without realizing it, or a several day fee because someone forgot to return one for a few days.

Inflexible incident by incident, it made me and those I knew hate Blockbuster, and bemoan the lack of alternatives. Blockbuster didn’t have a customer loyalty programs at the time, and unlike the neighborhood video store where the clerk was a friend, at Blockbuster you were dealing with an underpaid, no-stake peon, with no incentive or empowerment to solve your problem.

This is the most obvious side of how Blockbuster failed, by hubris, or mistaking its stranglehold on the renting public as permission to charge any fees it could dream up. But I think there was another component. When you’re a company who is so detached from what your customer is experiencing with your product, if your relationship to your customer is simply, “here’s what we offer, take it or leave it and we know you have few (if any) choices,” that implies a certain deafness to practical reality, which surely manifests in other ways within the corporate structure.

A company that thinks its clients stupid or patsies, will sooner or later run headlong into the brick wall that’s built when the customers catch on and rebel.

Like many business mistakes, everything looks good until it doesn’t, and this can allow a company to continue making grievous mistakes until, bam, all at once, they realize they’re standing on thin air, with no customer loyalty and a new consumer alternative that’s made them obsolete. See the photo above.

  • Anonymous

    Regardless of the business practices of Blockbuster, my
    employer DISH network has bought them and is now offering their massive library
    to it’s customers.  With over 100,000 movies, shows and games, and ten
    times the on-demand content of Comcast or DirecTV, DISH is now the clear leader
    for relevant content.  And this all comes with none of the hassle found
    when streaming online!!  Click the link below to see how to get 3 Months
    FREE Blockbuster!!  http://www.goo.gl/wuMrN

  • Sphilipr

    Hmmm…never went to blockbuster but you are reminding me of all the retail banks I know.

  • Moishe

    Yeah, that gets especially interesting when you look at the $3.00 ATM withdrawal fees that some of them are charging, plus the extra $2.00-$3.00 your own bank charges if you withdraw from another bank.
    The best part of that is that all of this costs the banks next to nothing, and the only way that they got congress to approve these ATM’s in the first place was that it was supposed to reduce the cost and increase the convenience to consumers.
    It it both very funny and very sad.